HealthSpring Inc. (HS) is fighting the battle of rising health care costs. The company operates affordable healthcare plans for individuals on Medicare in Alabama, Florida, Illinois, Mississippi, Tennessee and Texas. As the nation’s attention turns to healthcare reform measures, HealthSpring is building its market share and is likely to emerge as a strong competitor in the regions where it has established a presence.

Analysts were expecting a rough second quarter for HS due to the rising costs of medical coverage. Despite positive demographics and an aggressive cost cutting program, HS did in fact see earnings drop 19% compared to the levels it saw last year. But looking at a larger picture, the firm actually should see earnings growth this year with the consensus expecting earnings of $2.17 per share. A growing customer base has led to a predictable stream of increasing revenue, and management expects margins to stabilize over the next year.

HealthSpring Inc. (HS) is fighting the battle of rising health care costs. The company operates affordable healthcare plans for individuals on Medicare in Alabama, Florida, Illinois, Mississippi, Tennessee and Texas. As the nation’s attention turns to healthcare reform measures, HealthSpring is building its market share and is likely to emerge as a strong competitor in the regions where it has established a presence.

Analysts were expecting a rough second quarter for HS due to the rising costs of medical coverage. Despite positive demographics and an aggressive cost cutting program, HS did in fact see earnings drop 19% compared to the levels it saw last year. But looking at a larger picture, the firm actually should see earnings growth this year with the consensus expecting earnings of $2.17 per share. A growing customer base has led to a predictable stream of increasing revenue, and management expects margins to stabilize over the next year.

Private health insurance companies have come under attack lately for making profits, even "record profits," allegedly because of mergers, lack of competition, and monopoly power.

Health insurers’ stocks began correcting late last week and may correct some more in response to renewed uncertainty about what kind of health insurance reform legislation, if any, will make it through Congress this year.

After rallying in anticipation of a watered down health insurance reform bill, if any, health insurers and other health stocks face two or three months of uncertainty as President Obama, members of Congress, lobbyists and the public fight over what ObamaCare will be.

Markets weaken in the face of uncertainty, and the uncertainty in the health stocks markets rose late last week as the last House committee approved a bill that includes a somewhat watered down but still strong public option health plan. The Senate Finance Committee’s gang of three Democrats and three Republicans are trying to come up with a bill that would win at least 60 votes in the Senate. If they can’t, the Democrats will try to push through their health care reform in a budget reconciliation bill. But that reportedly would force them to drop a lot of health insurance reforms.

Speculators seem to be betting that a watered down health insurance reform bill won’t hurt health insurers, hospitals, drug makers or medical device and supply manufacturers.

Stocks for almost all of these health sectors and for exchange trade funds that track health stock indexes turned higher last week.

The future of health care reform seems to be so uncertain that speculators in the stocks of health insurers, health care providers, medical device makers and exchange traded funds that track health stock indexes aren’t sure which way to turn.

On Wednesday, as expected, health insurers’ stocks lost part of the gains they made Tuesday when it looked like insurers wouldn’t face competition from President Obama’s government-run public option health plan, or government HMO. Late Tuesday, Obama reasserted his support for a public option, which is why insurers’ stocks fell Wednesday.

Health insurers’ stock prices are likely to fall Wednesday. Most of them rose smartly Tuesday on news that President Obama would accept a health bill without a public option health plan.

But not only did the left get to Obama and force him to reassert his demands for a public option health plan, or Government HMO, Senate Majority leader Harry Reid (D-NV) told Sen. Max Baucus (D-MT) that the health bill must include the Government HMO.

The Obama administration Monday backed down from its demand that Congress enact a public option health plan and said that any approach that would increase competition among health insurers would be acceptable to the president.

Good move. If Congress takes the bait, health insurers will face uncertainty instead of extinction.

Health insurers fell sharply last week on news that during June, unemployment rose to 9.5%. The stocks also may be reflecting growing pessimism among investors that the Democrats' public option heath plan may still get a weak new lease on life.

It's hard to sell health insurance when unemployment is rising, and when insurance markets weaken, price wars among insurers often break out, although they don't seem to be a big problem yet.

Wal-Mart (WMT) Tuesday joined the Service Employees International Union in backing a new law that would force all employers to subsidize their employees' health insurance.

In reaction, watch the millions of employers that don't offer health insurance to their workers come out in favor of President Obama's public option health plan.

Wellpoint Health Networks Inc. (WLP) is looking like a buy to Barron's, Morningstar and some technical analysts despite the stock's sharp runup since early March. Options traders seem to be more bearish on WLP.

Better pricing in the health insurance markets and the increasing odds that Congress won't create a Medicare for all, or public option health plan that would compete with Wellpoint are all very bullish.

Q1 2009 Earnings Call

April 30, 2009 10:00 am ET

Yesterday there were a couple of posts about how tech stocks are currently especially attractive because they hold plenty of cash and tend to have little debt. Paul Kedrosky initially caught my eye with his post "Tech Cash is King" which in turn pointed me to a story on Bloomberg by Eric Martin.

I ran a screen last night that looked at both cash and debt. Specifically, I screened for a Price-to-Cash ratio under three, a Debt-to-Equity ratio under three and a Market Cap greater than $2.5 million. Based on these criteria, I obtained a list of 136 stocks.

Q4 2008 Earnings Call

February 10, 2009 5:00 pm ET

Baby Boomers may be a little further from retirement now that the stock market has tumbled, but they are still getting older.

In the United States, Baby Boomers are now all over the age of 44 and some are turning 62. They make up an estimated 25% of the population, with another 12.7% over the age of 65.

Q3 2008 Earnings Call

October 31, 2008 10:00 am ET

Healthspring is weathering the Wall Street financial storm as revenues rose 47% in the second quarter. The company raised 2008 guidance on the back of strong Medicare premium revenues. Healthspring has a forward P/E of 9.40.

Company Description

Elasticity of demand is a concept that resides at the core of economic fundamentals. Simply stated, elasticity of demand measures customer sensitivity to fluctuations in price. If price adjustments lead to a change in purchasing behavior, demand is considered to be elastic.

Demand sensitivity is a critical factor when evaluating a companies ability to navigate economic volatility, a dynamic that has become particularly relevant within the last year as our economy has muddled through a number of challenging circumstances.

Q2 2008 Earnings Call Transcript

July 30, 2008 10:00 am ET